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We expect Hospira Inc. (HSP - Analyst Report) to beat expectations when it reports first quarter 2014 results on Apr 30 before the opening bell. Last quarter the company delivered an earnings surprise of +2.00%.

Why a Likely Positive Surprise?

Our proven model conclusively shows that Hospira is likely to beat earnings this quarter because it has the right combination of two key ingredients.

Positive Zacks ESP: The Earnings ESP (Expected Surprise Prediction), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +4.08%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank #3 (Hold): Note that stocks with a Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings estimates. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

The combination of Hospira’s Zacks Rank #3 and an ESP of +4.08% makes us confident of an earnings beat this season.

Growth Factors This Quarter

Hospira has delivered positive earnings surprises in each of the last four quarters with an average beat of 10.34%.

Revenues from the company’s Specialty Injectable Pharmaceuticals (SIP) segment, the biggest contributor to Hospira’s revenues, are expected to climb this quarter as well. However, we believe Hospira’s revenues will remain under pressure until the manufacturing issues confronting the company are resolved.

Operating costs will increase in the first quarter of 2014 as Hospira is investing actively in its pipeline. Increased costs will hurt the bottom line.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements − a positive Zacks Earnings ESP and a Zacks Rank #1, #2 or #3

Actavis (ACT - Analyst Report) has an Earnings ESP of +3.34% and holds a Zacks Rank #2 (Buy). Actavis will be reporting first quarter earnings on Apr 30 before market opens.

Allergan Inc. (AGN - Analyst Report) has an Earnings ESP of +0.89% and holds a Zacks Rank #2. Allergan will be reporting first quarter earnings on May 7 before market opens.

Endo International plc (ENDP - Analyst Report) has an Earnings ESP of +5.95% and holds a Zacks Rank #3. Endo will be reporting first quarter earnings on May 1 before market opens.

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